181 The Esplanade [2000] QBCCMCmr 380 (27 July 2000)

C G YOUNGREFERENCE: 0291-2000

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	518
Name of Scheme:	181 The Esplanade
Address of Scheme:	181 The Esplanade CAIRNS QLD 4870

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Dennis Howell TERRACINI, owner of Lot 26, and Integrity Insurances Pty Ltd ACN 008 559 840, owner of Lot 32,

1. C G YOUNGI hereby order that –

(a) The persons declared elected as executive and ordinary members of the committee at the reconvened annual general meeting held on 29 May 2000 are no longer members from the date of this order.

(b) The persons holding the executive and ordinary member positions on the committee immediately before the purported elected of 29 May 2000, are, by the operation of section 25(1) of the Body Corporate and Community Management (Standard Module) Regulation 1997 and by this order, the members of the committee for the respective positions from the date of this order.

2 I further order that the body corporate must call and hold an extraordinary general meeting of the body corporate as soon as is practicable but no later than two (2) months from the date of this order for the purposes of electing a committee, and in respect of the meeting must –

(a) within two (2) weeks of the date of this order invite nominations for election as committee member and allow a further two (2) weeks for the receipt of nominations; and

(b) serve notice of the meeting no sooner than one (1) week and no later than three (3) weeks, after the close of nominations,

and in so doing must otherwise serve the notices according to the requirements of the legislation as if they were for a committee election to be held at an annual general meeting.

3 I further order that the meeting must consider any other motion submitted to the secretary in accordance with the legislation.

.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0291-2000

“181 The Esplanade” CTS 518

The applicants, Dennis Terracini of Lot 26 and Integrity Insurances Pty Ltd owner of Lot 32, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”), quote -

a.	Declaration that the decision of Mr Donald John Graham (Chairperson) to adjourn the annual general meeting held on 26 May 2000 to 29 May 2000 was void for irregularity.

b.	Declaration that the resumed annual general meeting held on 29 May 2000 was void for irregularity.

c.	Declaration that the election of committee members at the resumed annual general meeting held on 29 May 2000 was void for irregularity.

d.	That Cairns Body Corporate Management Pty Ltd-

(i) Within 7 days of this order, serve notice on each owner pursuant to section 13(2) of the Body Corporate and Community Management Act 1997calling for nominations for election as a member of the committee within 7 days of the date of service.

(ii) Call a general meeting for the purpose of electing a committee for the current financial year, to be held within twenty-eight (28) days of the last day on which nominations for election to the committee must be received under order (d)(i) above

e.	Such further order as the adjudicator deems fit.

The applicants have also made application for interim orders in the same terms.

Section 223(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

(a)	a claimed or anticipated contravention of the Act or the community management statement; or
(b)	the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or
(c)	a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 223(2)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

Section 225(1) of the Act provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

This is one of five applications that I have before me for adjudication of disputes within “181 The Esplanade”. Interim orders have been sought in respect of each of them. On 8 June 2000 I made Interim Order 292-2000 dismissing the application for an interim order in respect of Application 292-2000 lodged by the same applicants for this application, Mr Terracini and Integrity Insurances Pty Ltd. A final order to that application will also be issued today. The other three applications are Applications No’s. 306-2000, 310-2000 and 359-2000, all of which have also been lodged by Mr Terracini and Integrity Insurances Pty Ltd except for 310-2000 which was lodged by Aninoxlo Pty Ltd ACN 010 888 856 as owner of Lot 34.

Concurrently with the order to this application, and the final order to Application 292-2000, an interim order will also be issued for Application 359-2000.

Because of the related nature of the applications, this order and that for 292-2000 have been held over pending the close of submissions for Application 306-2000 which was last Friday 21 July 2000. An amendment to Application 359-2000 was received on 18 July 2000 seeking an interim order to prevent an extraordinary general meeting scheduled to be held this Friday 28 July 2000, from proceeding. The reason for my issuing Interim Order 359-2000 today will become apparent later in these reasons.

On Tuesday 25 July 2000 I held a teleconference with the legal representative for the applicants, Michael Laycock of Petersen McCullough Robertson, and the legal representative for the respondent body corporate, Jodie Ross of Williams Graham & Carman. The conference was for the purpose of giving notice of my reasons and decisions in respect of Applications 291 and 292-2000, and, more importantly, notice of my interim order and reasons for Application 359-2000 requiring the extraordinary general meeting not proceed. I believe it is in everyone’s interests that I make known that interim order verbally so that the stop documents could be sent to owners by the body corporate as quickly as possible to lessen any inconvenience the order may cause. It appears, in any event, that the body corporate had itself decided to defer the meeting.

Before proceeding to a determination of this application there is a matter of jurisdiction that, although not raised by the parties, I need to address. The applicants have nominated the respondents to be both the body corporate and “Donald John Graham (chairperson and owner of Lot 25)”.

The “Dispute Resolution” provisions are set out in Chapter 6 of the Act. Section 182 provides that a dispute must be between certain defined parties to bring it within the dispute resolution provisions. Section 183 then sets out the various acts that may constitute a dispute. Clearly the matters raised in the application are a dispute within the meaning of section 183 as they concern the conduct of a general meeting of the body corporate.

However, the question arises as to whether Donald Graham is a recognised disputant under section 182. This section provides that a dispute may be between –

(a) An owner or occupier and another owner or occupier.

(b) An owner or occupier and the body corporate.

(c) A body corporate and a Body Corporate Manager.

(d) A body corporate and a service contractor who is also a Letting Agent.

(e) A body corporate and a Letting Agent.

There is no provision for an owner to bring a dispute against the chairperson of the body corporate. While Graham may also be an owner, from the events which ground this application it is clear that he is named as respondent because of certain actions he took in his capacity as chairperson. In my opinion he cannot be a respondent in this dispute and I will deal with the application as a dispute between the applicants and the body corporate only.

The events leading to this application are as follows. At the annual general meeting of 26 May 2000 following the determination of motions and prior to when the election ballot would otherwise have been conducted, the meeting was informed of the provisions of section 74(3)(c) of the Body Corporate and Community Management (Standard Module) Regulation 1997 (“the Standard Module”). This provision precludes the use of proxy votes in the election of committee members.

The chairperson, Mr DJ Graham, adjourned the meeting to 29 May 2000 for the purpose of allowing those owners who had deliberately not completed election ballot papers in reliance on their proxy donees voting in their stead, to complete ballot papers. The adjournment had the effect of providing a means whereby these donor owners could cast an admissible vote in the election of committee members. At the reconvened meeting the minutes show that eight further “voting papers” (ballot papers) were admitted.

There is a conflict between the parties as to whether the chairperson acted alone in adjourning the meeting (though upon legal advice), or whether a vote was taken from the floor in favour of the adjournment and the chairperson acted on that vote. Whichever way it occurred is irrelevant in my determination of this application.

The position of the applicants is simply that there was a quorum present at the meeting of 26 May for the election of committee members to proceed and therefore ballots for the positions should have been conducted and the successful candidates declared elected to the various positions.

The respondent body corporate has made a submission to the application through Williams Graham & Carman, Solicitors of Cairns. It relies on three grounds in opposing the orders sought.


The proxy Form: The respondent contends that two of the approved forms under the legislation, “Proxy Form For Body Corporate General Meetings” (Form 6) and the “Statement Regarding Meeting Procedure and Voter’s Rights for an Annual General Meeting” (part of Form 4), are misleading in not alerting owners to the statutory prohibition on the use of proxies in voting in committee ballots. The applicants state that although the form refers to sections 49 and 51 of the Standard Module, it does not refer to section 74(3)(c) which imposes the prohibition.

I do not agree that the forms are misleading. The first mentioned form includes a general caution to owners that, “The regulations set out a number of restrictions on the use of proxies, including an ability for the Body Corporate to further restrict their use including prohibition.” The second mentioned form refers to section 49, which defines who is entitled to vote at meetings, and to section 51, which describes how voters may vote (personally, voting paper or proxy). The Standard Module sets out a number of specific restrictions regarding the use of proxies, and not using them in elections is only one of them. For example: section 72(4)(a) provides that a person cannot exercise proxies for persons greater in number than 5% of the number of lots in the scheme; Body Corporate Managers cannot exercise proxies (s.75); or original owners can only exercise proxies in certain circumstances s.75). The form gives only a general warning and does not purport to list restrictions.


Withholding of Legal Advice: The respondent states that Mrs Stevens of Cairns Body Corporate Management Pty Ltd had received earlier legal advice concerning the use of proxies, including advice on the meaning and operation of section 74(3)(c). It believes that the committee should have been informed of the advice so that the information could have been passed on to owners.

Section 74(3)(c) is clear and unambiguous as to its meaning and, until the addition of further words to cover the situation of appointments for casual vacancy positions, has been in that form since the commencement of the regulation some 3 years ago. It states, “A vote by proxy must not be exercised at a general meeting on a ballot for the election of a member of the committee,[or for otherwise choosing a member of the committee].” The body corporate has no duty to inform owners as to their eligibility to vote or how they should vote. In any case Mrs Stevens has stated in a letter to Petersen McCullough Robertson that she did not receive any written legal advice on the matter and only confirmed the meaning of the section with Mr Peter Nugent, solicitor of Mallesons Stephens Jaques, immediately prior to the meeting being held.

I reject this as a ground for adjourning the meeting.


Legal Principles – Chairperson’s Inherent Right to Adjourn Meetings. The respondent refers to a number of cases in support of its submission that a chairperson has an inherent right to adjourn meetings for the purposes of “forwarding and facilitating business of the meeting”. It refers to the matter of McDonald v Thorley [1976] Qd R 208 where the chairperson was validly held to have adjourned a meeting because a quorum was not present as an exercise of his inherent right to adjourn, as analogous to the circumstances of 26 May. The circumstances are quite different. The adjournment in that matter was necessary for the facilitation of the progress of the business of the meeting, but here there was nothing preventing the “forwarding and facilitation” of the meeting. All the things necessary for a ballot to proceed were in place; the only issue was that the votes of some people could not be admitted to the ballot. It could similarly be argued that a meeting be adjourned because some voters had not paid their contributions and were ineligible to vote; or that some key voters were delayed in traffic. A quorum was present and the meeting should have proceeded to a ballot.

In summary, none of the arguments put by the respondent have persuaded me that the Chairperson, or the meeting if a vote was taken, acted correctly in adjourning the meeting for the purpose of allowing certain persons to complete an admissible vote.

In my view the election of committee members as declared at the reconvened meeting of 29 May 2000 is void and my order is to that effect.

Section 25(1) of the Standard Module provides that “The term of office of a member of the committee continues until another person is chosen for the position.” Having set aside the election, the natural default position under the legislation is therefore that the previous officeholders are the committee. While in some extreme situations a declaration can be made in favour of the candidates who would otherwise have been elected, I do not think those circumstances exist here. The integrity of the voting documents, especially with the committee and Body Corporate Manager having changed in the meantime, is unknown. In any case the applicant has asked for a fresh election and that is also my choice in the circumstances.

In the teleconference with Michael Laycock and Jodie Ross referred to earlier, I informed them that it was now necessary for the body corporate to hold a general meeting to elect a fresh committee. The meeting that was to be held this Friday 28 July did not make provision for fresh elections. In my Interim Order 359-2000 of today, I have ordered that meeting not to proceed. My order to this application to hold a general meeting will therefore provide a means for the body corporate to determinine: a fresh committee in consequence of this application; a motion concerning the engagement of solicitors, and payment of fees, in consequence of Order 192-2000; and those other motions properly before the body corporate, comprising the motions on the agenda for the stopped meeting of this Friday 28 July, and any other motions submitted before notice of the ordered meeting is given (see section 41(3) of the Standard Module). The motions on the agenda for Friday may of course be withdrawn or replaced.

In the circumstances it is not intended to invite further submissions regarding this matter, or to make a further order, since this decision, though an interim one as sought by the applicant, is final in its determination of this matter. The relevant parties may appeal this interim order.2y